FTX had secured billions in funding the very day it signed its Chapter 11 bankruptcy back in November. Or, at least that's what Sam Bankman-Fried, the now-notorious founder of the crypto exchange and its sibling company Alameda Research, a private hedge fund, was set to say to Congress in testimony.
"Starting on November 8th, I was put under extreme pressure to file for Chapter 11," Bankman-Fried writes in the prepared testimony acquired by Forbes. "Most of that pressure came from Ryne Miller, the General Counsel of FTX US and a former partner of Sullivan & Cromwell (S&C), and Sullivan and Cromwell itself." Bankman-Fried goes on to detail a series of events in which S&C allegedly pressured the former CEO to rescind his duties and nominate John Ray as the new CEO. Bankman-Fried even claims a "potential funding offer for billions of dollars" was received within 10 minutes of filing for bankruptcy.
- Of the tactics S&C allegedly used to pressure Bankman-Fried to file for Chapter 11, "they range from adamant to mentally unbalanced," he writes in the testimony statement. "They also called many of my friends, coworkers, and family members, pressuring them to pressure me to file, some of whom were emotionally damaged by the pressure. Some of them came to me, crying."
- Bankman-Fried never delivered these remarks as he was arrested in the Bahamas the day before he was set to testify before the US Congress.
- Sullivan & Cromwell has not commented on the planned testimony, according to Law.com.
Not Guilty Plea
Bankman-Fried is expected to plead not guilty on Tuesday before U.S. District Judge Lewis Kaplan in Manhattan, reports Reuters. Yet, FTX co-founder Gary Wang, and Alameda Research CEO Caroline Ellison have both plead guilty and are expected to cooperate with federal officials in charging Bankman-Fried. So why is he pleading not guilty? “It’s clear that the government is not going to be using him to cooperate against them, so he’s clearly working on something else,” defense attorney Jeffrey Lichtman told The Guardian. “Why else would the government consent to a bail package for public enemy No 1?”
Just as SBF played victim during his media blitz in November (“this was all an honest mistake”; “I didn’t know any of this was happening either”), he seems to be using a similar legal strategy still: claiming his previous lawyers pressured him into bankruptcy, and that he remains not guilty.